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Volatility, uncertainty: what Asia has to fear from Brexit turmoil
- Theresa May’s postponement of a vote on the UK’s departure from the EU has hit the pound and Asian markets
- Analysts fear a new era has dawned in Asia’s trade with the West – one dominated by geopolitical chaos
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Prime Minister Theresa May’s last-ditch move to postpone a vote on her plan for Britain’s departure from the European Union has let fly a new round of concern across Asia, with governments, companies and consumers bracing themselves for the fallout from Brexit.
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Chaos reigned after May’s decision on Monday: the pound fell sharply, Asian markets plummeted and Britain’s political future was thrown in doubt.
For Asia, analysts said the UK’s continuing turmoil pointed to something else: a new era of trade with the West in which “volatility and uncertainty are the new norm”, in the words of one firm, and a time when geopolitical chaos could increasingly damage economic growth from India to Japan.
“Asia should be worried at the instability of any Brexit scenario. There’s the loss of access via the UK to the EU Single Market – Japan has been very vociferous on this – and consumers in Asia may be impacted by reduced exports to the UK and EU,” said Dr Fraser Cameron, director of the EU-Asia Centre.
And Ross Denton, a partner at Baker MacKenzie, the world’s second-largest international law firm, said that the stable business environment in which Asian businesses could build supply chains with the West was now under threat.
“With Brexit, as well as other factors like the election of President Trump, all that has been put in question. Decisions that businesses faced that were relatively straightforward in the past are now up in the air, and businesses have to consider options that they might not have had to before,” said Denton from London.
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